U.S. Supreme Court
Case v. Bank, 100 U.S. 446 (1879)
Case v. Bank
100 U.S. 446
A., in order to secure the payment of his note to B., pledged to the latter certain shares of the capital stock of a national bank in Louisiana, with authority to sell them in default of such payment. Default having been made, B. sold them, and in March, 1873, applied to the cashier of the bank to have them transferred on its books. That officer refused to allow the transfer, on the ground that A. was indebted to the bank. Before the transfer could be enforced, the bank failed, and C. was appointed a receiver, against whom B., Feb. 24, 1876, brought this action to recover damages for the loss sustained by him. It does not appear that the bank ever adopted any bylaw providing for a lien on the shares of a stockholder indebted to it, or that A.'s debt to it had been contracted before his stock was pledged to B.
1. That the action is not prescribed by the limitation of one year.
2. That the cashier having been entrusted by the directors of the bank with the transfers of stock, his refusal to permit the transfer was the refusal of the bank.
3. That judgment having been rendered, the court below had power to order C. to pay the claim, or certify it to the comptroller.
This is an action by the Citizens' Bank of Louisiana against Frank F. Case, receiver of the Crescent City National Bank, to recover damages for an alleged refusal on the part of the latter bank to permit a transfer of two hundred and twenty shares of its capital stock.
The petition, which was filed Feb. 24, 1876, alleges, in substance, that the shares were pledged to the Citizens' Bank by Lizardi & Co., to secure the payment of their note to it for $20,000; that the act of pledge contained an authority to the Citizens' Bank to sell and transfer the stock, for the purpose of paying said note; that said stock was sold under the act of pledge for $40 per share, but that the Crescent City National Bank refused to permit the transfer thereof on its books, alleging the indebtedness of Lizardi & Co. to it as an excuse for such refusal; that, by such refusal, the sale of said stock was prevented, and that before legal steps could be taken to enforce the right of transfer, the Crescent City National Bank failed, causing a loss to the Citizens' Bank of $8,800.
The prayer is that the receiver be ordered to recognize the Citizens' Bank as a creditor for said sum, and that he place it chanroblesvirtualawlibrarychanroblesvirtualawlibrary
on the next tableaux of distribution for its share of the amount already divided among creditors and in all future dividends to be distributed.
On the 15th of March, 1876, the receiver filed an exception, setting up two grounds of defense:
1. That the cause of action did not accrue within one year next before the commencement of the action, as appears from the petition filed.
2. That the petition did not disclose a cause of action.
These exceptions having been overruled, he filed an answer reserving them, and denying all the allegations of the petitioner except his appointment.
A verdict of the jury in favor of the plaintiff below for $4,000, with five percent interest from March 6, 1873, having been returned, the court rendered judgment
"that the Citizens' Bank of Louisiana do have and recover of the Crescent City National Bank, Frank F. Case, receiver, $4,000 and interest, &c., . . . and that Frank F. Case, receiver, do recognize the said Citizens' Bank of Louisiana as creditor; . . . and that he do pay the same, or certify the same to the comptroller, to be paid in due course of administration, . . . and that the Citizens' Bank of Louisiana do receive, before further payment to creditors, its due proportion of dividends pro rata with those already paid to the creditors of the Crescent City National Bank."
The receiver, thereupon, brought the case here.
The remaining facts are set forth in the opinion of the Court.